Activation of sonic hedgehog (Shh) in cancer stem cell (CSC) has been demonstrated with aggressiveness of pancreatic cancer. In order to enhance the biological activity of α-mangostin, we formulated mangostin-encapsulated PLGA nanoparticles (Mang-NPs) and examined the molecular mechanisms by which they inhibit human and KC mice (Pdx(Cre);LSL-Kras(G12D)) pancreatic CSC characteristics in vitro, and pancreatic carcinogenesis in KPC (Pdx(Cre);LSLKras(G12D);LSL-Trp53(R172H)) mice. Mang-NPs inhibited human and Kras(G12D) mice pancreatic CSC characteristics in vitro. Mang-NPs also inhibited EMT by up-regulating E-cadherin and inhibiting N-cadherin and transcription factors Slug, and pluripotency maintaining factors Nanog, c-Myc, and Oct4. Furthermore, Mang-NPs inhibited the components of Shh pathway and Gli targets. In vivo, Mang-NPs inhibited the progression of pancreatic intraneoplasia to pancreatic ductal adenocarcinoma and liver metastasis in KPC mice. The inhibitory effects of Mang-NPs on carcinogenesis in KPC mice were associated with downregulation of pluripotency maintaining factors (c-Myc, Nanog and Oct4), stem cell markers (CD24 and CD133), components of Shh pathway (Gli1, Gli2, Patched1/2, and Smoothened), Gli targets (Bcl-2, XIAP and Cyclin D1), and EMT markers and transcription factors (N-cadherin, Slug, Snail and Zeb1), and upregulation of E-cadherin. Overall, our data suggest that Mang-NPs can inhibit pancreatic cancer growth, development and metastasis by targeting Shh pathway.